Introduction

It had been one of our busiest holiday seasons in years; now it was late spring and we weren’t hitting our numbers. I was driving the team, but they seemed distracted and weren’t getting results. Their attention was elsewhere. Over the past several months I had clicked through the checklist of options for building their capabilities. We had gone through some refresher training. I instructed, I demonstrated, and then I had them practice the activities that lead to success. We’d grown really close over six years. I was confident that Isabel and Olivia had the talent to meet the expectations I had for them. I had a lot invested in those two. They were loyal to the organization, and I hated the idea of giving them the sack. I preferred to develop them rather than trade them out. Not to mention, if I were to let them go, their mother would have been furious. While we were having dinner in the kitchen with our two daughters, she reminded me that this was no time for a coaching session because it was a school night.

Nevertheless, we had household work to allocate. Since the girls had recently turned six and eight, it was important that we have weekly objectives. I had created a scorecard with performance measures: cleaning the kitchen, making beds, feeding three cats and two dogs, brushing teeth. And I had an Allowance Incentive Program (the AIP as I branded it) tied to each measure on a weighted point system with accelerators for overachievement. There was plenty of upside for making a few more beds and feeding a few more cats. I thought, “Maybe I’m setting their goals too high. I could use some benchmarks. Perhaps I could tap into a group of parents at school and get some comparable productivity numbers from their kids, then calibrate our quotas to the 75th percentile of that group.” After a long internal struggle, I realized setting their goals and getting them to perform was about more than the spreadsheets. It was also about looking in the mirror and understanding my young daughters and their capabilities. I know I’m not alone among parents who bring their work home. Looking for the answer in the analytics and benchmarks can be tempting for a sales leader, but, as I learned firsthand, quota setting is a challenge that goes far beyond the numbers.

In my 30 years of working with sales leaders, one of the biggest issues I’ve seen year after year in company after company is setting effective quotas. According to our research at SalesGlobe, 61 percent of companies say that setting and managing effective quotas is one of their top three sales effectiveness challenges. Ineffective quota setting can limit the company’s ability to hit its business plan. Quota challenges can affect the ability of the sales organization to reach its goals and target compensation, lead to higher turnover, hinder the company’s ability to attract top talent, and lower the sales organization’s motivation. Quota setting and management is a topic that is often discussed from board rooms to the front line. However, most companies have yet to fully solve the problem.

Sales leadership knows it has to give the sales organization a goal each year that it might not be able to reach, and bridge the gap between what the company wants and what reps can accomplish. And frontline sales reps often end up with quotas they think are unfair or ridiculous and that jeopardize their ability to make a living. Each year, the tension and dysfunction continue. Many companies rationalize the problem and continue on this path for years, never coming to a solution. Without a solution, quota challenges continue in the form of company sales performance challenges through goal under-attainment, cost challenges from sporadic rep performance that results in misalignment of pay with performance, and people challenges with recruiting and turnover problems. For companies dealing with quota challenges, these must be solved to ensure the long-term health of the business.

Few organizations understand how to set quotas that reflect real market opportunity and sales capacity with enough transparency to motivate the reps. For many organizations, setting effective quotas is elusive because they try to solve the quota problem with the same time-worn approaches or avoid the problem altogether. The sales organization continues to shoulder the burden of misallocated numbers that affect the sales team and the company. Rather than battling with who gets the number, solving the quota problem requires new thinking to break down the challenge into its components and apply a problem-solving approach that engages the organization.

This is a book about quotas. But more important, this is a book about problem solving for quotas. It would be easy to write down everything we have learned about quotas from every organization we’ve worked with, but it is far more valuable to lay out an approach to solving the quota problem that any organization can apply. This book addresses challenges that affect every company in nearly every country. It is for the C-suite, sales leadership, sales operations, and frontline sales. It addresses sales leaders’ needs to set effective quotas as well as sales representatives’ needs to get a fair quota for themselves. And it looks at quotas in a new light, beginning with understanding your quota challenge, the story behind it, and applying Sales Design Thinking™—a five-step, iterative problem-solving process—to solve it. To that end, I’ll provide some design thinking methods specific to sales along with some guiding principles.

To provide insight for our problem solving, our team conducted research that included interviews, surveys, and work with more than 140 companies. From this research, we found that quota setting is one of the top sales effectiveness challenges for most companies. It is also the top sales compensation challenge for most companies. We found most companies struggle not only with the data but also with the people dynamics and processes required to effectively set and manage quotas. But most significantly, we found a pattern of success for companies that are effective with quotas that includes the interaction of people, market opportunity, and sales capacity. I’ve included the results of this research throughout the book as part of the overall narrative.

As managing partner of SalesGlobe, a sales effectiveness consulting firm that serves Global 1000 clients, I’ve worked through these challenges and methods with companies around the world. As a former designer, my natural approach is to use design thinking to take apart a problem, look at components in a different way, and come up with new alternatives to solving it.

Chapter 1 begins with a look at the trouble with quotas. Setting and managing quotas is one of the top sales effectiveness issues, along with creating an effective sales strategy and sales process, and I examine a number of the analytical and human facets of quota challenges.

In chapter 2, I look at Sales Design Thinking, a method I’ve used over the years that helps to reframe the problem and redefine the Challenge Question. We can then disaggregate that challenge and begin to solve for the components of the quota problem. Sales Design Thinking gets to the critical “why” behind the problem and enables us to come up with a range of divergent solutions rather than follow the same old path of what we’ve done before or what competitors are doing that may not solve the true problem.

With the foundation of Sales Design Thinking, we move into chapter 3, which is about understanding the story behind the problem. For a lot of people, this begins a whole new way of approaching quotas. By understanding the story, we can dig much deeper into the root causes that can suggest potential solutions. From the story, we can also create a solution vision that projects the characteristics a great solution may have.

In chapter 4, I describe the first of the three major components of the Quota Success Model: people. People are at the center of solving the quota problem because most quota challenges involve leadership or user issues around clear process or comprehension. I describe the different functions in the organization that are involved in quota setting as well as their type of involvement and the dynamics between those groups.

Chapter 5 examines the next major component of the Quota Success Model: understanding market opportunity. Market opportunity sets the stage for what’s available to us within our addressable market. It’s driven by factors such as the segments that we focus on, the products that we offer, and our macroeconomic environment.

To round out the Quota Success Model, in chapter 6 I dive into the workings of sales capacity. This often-overlooked component defines what your organization can accomplish in going after its market opportunity. Sales capacity is driven by factors including role definition, headcount, talent level, focus, and workload. By putting together the three components of people, market opportunity, and sales capacity, you have the framework to solve the quota problem for any organization.

In the next three chapters, I detail a range of options to consider in your problem-solving process. In chapter 7, I reflect on history as a quota method. While historical quota-setting methods alone don’t provide the best solution for most companies in fast-forward mode, they can provide useful input when applied with other forward-looking indicators.

Sales potential methods are the subject of chapter 8. I describe methods that consider potential at the account level and at the market level, both with variations that are data robust and variations that work when accurate market data aren’t readily available.

In chapter 9, I focus on account planning as a method for quotas. While account planning is usually used just for creating an action plan, it can also be a valuable source of detailed, account-specific information on multiyear and single-year goals.

With the quota solution finally developed, in chapter 10 I turn to the topic of making change. Organizations can easily miss the importance of well-planned and executed communications and change management when undertaking a transition as consequential as quota setting. In this chapter I look at articulating the “why” behind the change, understanding the organization’s change readiness and capability, and creating your campaign.

Since I apply a question-based design thinking approach throughout the book, I include in the appendix my 10 favorite quota questions and analytics, Powerful Questions and Analytics for Understanding Your Story. These will give you insight as you begin your work.

I’ve truly enjoyed writing this book and providing some thinking on quota setting that you can apply to get new results. I hope that you find it valuable and that it puts you on a path of discovery on your quota problem-solving journey.